Government Mules

Watching my children grow older, now heading into the treacherous
shoals of the teenage years, has been a visceral reminder of how the
human mind develops. As young children, we see the world with fresh
eyes and wonderment, and then quickly begin testing the physical and
societal bounds as part of morphing into our more mature selves.

As we age into our teens and beyond, the testing of boundaries evolves
into a series of calculations. If I do “A,” we wonder, will it lead to
“B” or maybe “Z”?

From a young age, most of us are told to advance our education and
otherwise better ourselves so that we will be able to find a good job,
or a succession of good jobs, that will provide sustenance and security
lasting most of a lifetime before retiring to dawdle about in our
golden years.

At least that is the modern view of life pursued by the vast majority
of the citizenry in the developed world.

But having spent some time in rural Argentina recently – where it seems
to me that most people spend more time living and less time planning
to live – I have had some time to ponder the assumptions embedded in
this view.

What if, I wonder, the whole modern construct of what passes for making
the right moves in an advanced society is plain wrong?

Is the goal of working hard to get a good job and then moving up the
corporate ladder really so desirable? Is marrying and having 2.5 kids
and growing old in a glorified box in the burbs really so wonderful?

I asked someone who knows what percentage of their income – which is to
say the income of a reasonably successful person – now goes to taxes,
and the answer was, “Over 60%.”

What if the modern version of society is really nothing more than a
sleight of hand designed to fool the masses into becoming little more
than government mules, allowed their simple pleasures in exchange for
providing the muscle and the money needed to feed the beast?

An increasing number of the mules seem to me to have become
disheartened at the difficulty of creating and keeping enough wealth to
live the life envisioned in youthful dreams. And correctly so:
building lasting wealth is relatively easy when you keep 90%, but
nearly impossible when you keep just 40%. And, if the trend now in
motion continues in motion, the productive elements will soon be lucky
to keep 30%.

While even I can’t foresee things getting as bad as they did in Britain
in 1974, when the top 750,000 wage earners were slapped with a tax
rate of 98%, the steady build toward more regulations, more government,
more tariffs, and more taxes in more sectors of the economy will
affect a broader swath of the public and, in so doing, weigh even more
heavily on the nation.

And it will result in much the same thing experienced by the British at
the time – a mass expatriation by the more independent-minded and
entrepreneurial types.

(While the audience obviously skews toward the idea of expatriation, it
is interesting that a just concluded International Living survey found that some 96% of respondents were now actively considering
expatriation.)

But I drift like a pick-up truck going too fast around a rain-slicked
corner.

The modern version of the world, at least to my eyes, appears to be
losing credence with an increasing number of Americans. Simply, the
material well-being and little extras that we the people have
previously dreamed of are now unaffordable for most – especially now
that a willingness to take on an excess of debt is no longer being
readily confused with net worth.

For the government, with its switch long rusted on expansion mode, the
promises of a better tomorrow must be preserved, if only as an
inspirational illusion. Yet, with the hard reality of a collapsing
Camelot obvious for all to see, the administration and Congress are now
discomforted by the loud chorus of mules braying for more and better
fodder. And increasingly by the voices of others, the workers in this
economy, who are beginning to chafe in the traces.

Attempting to maintain societal status quo, the government is pursuing
fiscal and monetary policies that are anything but status quo,
including running trillion-dollar deficits as far as the eye can see.
But maintaining the status quo is only going to get harder. Social
Security, a time bomb planted by FDR, will run a deficit this year, as
opposed to 2017 as recently believed. The deficit is no surprise to
anyone, but the accelerating pace of the nation’s fiscal ruin very much
should be.

I was in grade school when John F. Kennedy delivered his signature
line, “Ask not what your country can do for you, but rather what you
can do for your country.”

In today’s paradigm, millions of Americans demand that the country do
more for them than they are willing or able to do for themselves, for
many in no small part because they have already been asked to give up
so much. At the same time, the government is making increasingly
muscular demands that those still able to give, give more.

On both sides of the equation, the government looms large – as you
would expect it to in a world where public institutions have become the
controlling force in virtually all aspects of life.

But the paradigm is broken, in no small part because a long succession
of U.S. governments have habitually made politically easy or expedient
choices – in the process squandering the wealth of generations and
setting the stage for a serious confrontation between the government
mules that have and those that have naught.

Of course, I hope for the best as the country goes through the paradigm
shift to whatever’s coming next. Yet, because no one can say what the
new paradigm will look like – and a lot less or a lot more government
are both equally likely – I am simultaneously planning for the worst,
including buying hard assets and diversifying internationally.

To fail to do so would be to passively accept the life of a government
mule.